KUALA LUMPUR (Aug 19): After a challenging first quarter and an anticipated weak second quarter, AEON Credit Service (M) Bhd is tightening its credit assessments, particularly for younger and lower-income borrowers, according to managing director Daisuke Maeda.
Maeda said stricter underwriting is already yielding results, with early signs of improved repayment collections. However, the consumer financier's near-term earnings are expected to remain under pressure due to elevated credit costs.
"Q2 (second quarter) is still challenging, but from Q3 and Q4 our performance will be better," he told The Edge after the signing ceremony between AEON Credit and its sister company AEON Co (M) Bhd on Tuesday to establish a joint venture (JV) entity.
AEON Credit's net profit for the three months ended May 31, 2025, fell 27.1% to RM77.55 million from RM106.41 million a year earlier, primarily dragged down by higher impairment losses on financing receivables. Revenue for the quarter rose 14.9% to RM599.92 million from RM522.26 million, supported by stronger loan and financing growth.
The company's core earnings for the quarter came in at only 20% of consensus full-year forecasts due to higher-than-expected write-offs, which prompted analysts to cut their earnings forecasts for the year.
Despite stricter loan screening, Maeda noted that the company's loan growth remains intact at about 10% year on year, supported by steady customer onboarding and AEON Credit’s instant approval process. "Although our approval ratio is gradually dropping, we are maintaining sales momentum," he said.
Given this, he expressed confidence that AEON Credit can match its FY2025 results and maintain its dividend payout, despite the weak start to its FY2026. Last year, the group posted a net profit of RM370.61 million on the back of RM8.41 billion in revenue and declared total dividends of 28.75 sen per share. It paid 28.25 sen in FY2024.
Regarding the group’s new partnership with AEON Co, Maeda believes the new JV entity — which will consolidate membership data from both companies into a single app — will allow AEON Credit to expand its customer reach. He expects early gains from the JV to appear about three years after its launch. "Our customers are mainly from B40 (bottom 40% earners); AEON Co's are M40. There is no overlap. By putting everything into one app, we can cross-sell," he explained.
Shares in AEON Credit, which have fallen over 20% year to date, finished at RM4.97 on Tuesday, down four sen or 0.8% from its previous close. This gives the group a market capitalisation of RM2.54 billion.